EU has reached a conclusion

BBC Article: Leaders agree eurozone debt deal after late-night talks

After long talks EU has finally come up with a plan to save Greece and therefore Euro and prevent the financial crisis. But will it work? The solution is, that the "banks holding Greek debt accept a 50% loss, the eurozone bailout fund will be boosted and banks will have to raise more capital".

Even though Euro's bailout fund has been increased to 1 trillion €, some people still argue that it might not be enough, especially not to bail out bigger economies, such as Spain or Italy. Interestingly, the article doesn't mention the fact that Slovaia, as the only country, has asked for an exception, and while Slovakia will still participate at the Euro bailout fund, they did not agree to loan any more money to Greece. It is also not definitley clear that Greece is now safe, as it will still have to battle it's huge debt, and make strong cuts in it's government spending.

But the new resolution has already had a positive response from the markets, as Euro has finally experienced growth, as the investors can see the higher stability, since with this resolution Europe showed the willingness to cooperate. Eurozone how ever has to wait for the Greek decision, which is to be made democratically, by a referendum. Although this solution might seem like a good deal for Greece, many Greek people still believe that bancrupcy would be a better solution than never ending debt.



Greek prime minister announcing referendum



Eurozone falling apart

The CNN article "How the euro became a broken dream", describes the situation in the EU and also the present issues that the Euro is facing. Previously a reasonably stable currency, Euro is now losing its credibility as countries who use it can't decide on what policies to implement in order to prevent a crises and depreciasion of the single european currency.  Although it is handy to have a currency that is used all throughout Europe, the current issues with the Euro make us wonder whether it was a smart idea to implement a single currency to a group of countries with very diffrent Economical policies.

Right now, when the first problems are coming up, many countries are starting to think that they have been better off with their own currency, as they didn't have to bail out less economically prospering countries. Even though many countries don't feel like it's fair, I believe that the Euro bailout program is neccesary to increase the stability in the Eurozone. However, it is unfairm especially for poorer countries such as Slovakia and Estonia, as they would be forced to send money to countries such as Greece who's citizens get more social benefits then do people in Slovakia. And now we are only talking about Greece, but what will happen when countries as big as Italy will need bailing out?

I think that the only way Euro could really become a good, stable currency would be if the European council had more power to control the Economical policies of member states, to make sure to prevent problems like the ones that Greece is currently experiencing. However, there is a very little chance that something like this would go through, as most people already think that EU has too much power, and many people don't trust the EU.


CNN Article:
http://edition.cnn.com/2011/09/23/business/europe-euro-creation-maastricht-chapple/index.html?hpt=ieu_bn2

John Maynard Keynes

John Keynes was born in Cambridge, England. His father was an Economist, and helped him pass his scholarship exams for university. At first he became famous after publishing article about recent economic downturn in India.

During the first world war, Keynes has been against the idea of suspension of specie payments, as it would ruin the future repuation of the city. He was also in charge of aqusition of foreign currencies, and his idea was to sell all spanish pesetas he amassed and thus making them less scarce and expensive.

During the great depression, Keynes was trying gind the connection between undemployment, money and a price. His main idea was published in a book called "Treaty of monarchy"  where he described that if the amount of money being saved exceeds  the amount being ivested then unemployyment will rise.

During the second world war Keynes wanted to apply "compulsotry savings" where workers would loan money to the government. He was also trying to implement a higher taxation.

5 types of unemployment

 Real wage unemployment

Milan Mrkvovrah, from Slovakia, finds it extremely difficult to find a job. His last job was in construction where he was a union member. Now he finds it impossible to find another full time construction job, perhaps because construction companies are forced to pay it's people more money then the should, because of the work unions. This means that they can hire fewer workers, so there's fewer jobs available. Also, because of the union, companies find it harder to fire a worker, even if he's not very skilled. So this leaves Milan, even though he's very skilled, without a job. He'd also be willing to work for less than the minimum wage, however because companies have to pay at least the minimum wage, they have to hire fewer workers, which again leaves Milan without a job.

Demand-deficient unemployment/Cyclical unemployment

Karoto Dolofonos is from Greece, which has recently experienced strong financial crysis. He used to work as a octopus hunter, but because of the financial crysis, people try to save their money, so there's not many people who are going to buy this delicious treat. Therefore, the company that Karoto works for has to make cut backs, as there's simply not enough demand for their product. They wished to keep all the workers, but only lower their wages until the crysis is over. However, because of the work contracts they're not allowed to do so, so instead they have to fire some of their workers, inlcuding Karoto. Karoto then ends up unemployed and joins the protests against the government cut backs, and demands that government keeps spending the money they don't have,

Frictional unemployment

XiongShou Huluobo, from Australia, used to work part time as chinese food delivery man, while he was working on his law degree. Now that he finally got his law degree, he can quit his delivery job to look for a high skilled job in his field with higher pay. Of course, it is not easy to find a job as a lawyer, which makes ZhengZhong temporarily unemployed, but once he finds a job he will be able to contribute better to the economy and also, as he will be getting more pay and doing something he enjoys, he will be more productive.

Seasonal unemployment

Dominik Carotaassassino works as a tourist guide on the island of Sicilly. However, tourists usually only come in summer, and demand for tour guides in winter is very low, which makes Domink unemployed during the colder months. He can still live off of what he saves in summer, his unemployment benefits. He also makes little money working as a Piciotto for local mafia family. However, if the government decided to lower or abolish the unemployment benefits, Dominik would be forced to find another off season job, possibly as a ski instructor on the Etna volcano, which was always his dream. It would also reduce the crime rate as with another job, he would no longer have to be tied with the organized crime.

Structural unemployment

Gulerod Morder is from Greenland, and his permanent occupation was hunting baby seals. This was his job and the job of his ancestors, Hunting baby seals is one of the main industries in Greenland and now, that EU has decided to ban hunting seals, plenty of Greenland men are left without a job to support their families in the Igloos. Now there's way too many unemployed people in his town of  Uummannaq which makes it almost impossible for Gulerod to find a job, as the competition is too high.  Danish government is planing to abolish taxes in that area in order to attract manufacturing companies to employ people in this area, however this is a long term solution and does not help Gulerod who's unemployed now.